SACRAMENTO, CA, March 3, 2023 -- IIABCal General Counsel Steve Young and Lobbyist John Norwood met Feb. 21 with California Insurance Commissioner Ricardo Lara’s top deputy to urge the Department to take immediate action to restore the admitted market for property insurance to competitive health.
IIABCal explained the plan it has developed—with the assistance of expert lawyers and actuaries retained with the Association’s Legal Defense Fund—to incentivize insurers to resume writing insurance in areas of the state most prone to catastrophic wildfire exposure. It has three main components:
- Giving insurers credit for the substantial costs they incur to procure reinsurance on California property risks. Such expenses are currently excluded from CDI ratemaking formulas.
- Allowing insurers to use widely accepted models to better empirically predict potential wildfire losses. Currently, CDI requires insurers to base rates solely on their own historic loss experience.
- Requiring the insurance commissioner to comply with longstanding legal requirements to act upon rate requests within six months. For too long, the Commissioner has pressured insurers to waive that deadline, which has often resulted in interminably long delays.
IIABCal requested the meeting to emphasize the severe impact the property insurance crisis is having on independent agents and brokers and their customers, and to express its desire to work with the Commissioner to develop effective solutions.
Chief Deputy Martinez told IIABCal that the Department is pursuing several paths and actions this year, using its existing powers, to mitigate the current availability crisis, and encouraged IIABCal to work with the Commissioner toward that objective, rather than to introduce its plan in the form of legislation.